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There
are two themes in FfD that are tightly connected in their application
in Southeast Asia and these are international trade and foreign direct
investment. These two find expression in export processing zones built
to encourage the entry of foreign direct investors in developing countries
and at the same time increase export production. These export-processing
zones have mainly catered to the production of textiles and wearing
apparel and information technology products.
Today’s
presentation looks mainly at the information technology sector to
illustrate how the policy environment at both international and domestic
levels have been harmonised to support a particular type of export
promotion as a strategy for development and that is the use of export
processing zones.
The
international environment has encouraged the use of incentives to
attract foreign direct investment that is linked to export production.
One of the most important trade liberalization agreements is the Information
Technology Agreement (ITA), which as signed during the WTO Ministerial
Meeting in Singapore in 1996. This agreement called for a reduction
of tariffs to zero by 2000 with exceptions up to 2005 and covers four
product groups, namely computer hardware, telecommunications equipment,
semiconductors and computer software and services.
Southeast
Asian governments found this agreement to be very important in their
trade strategy because it was getting increased market share of IT
products beginning the early 1990s. This increased market share is
mainly due to the relocation of many Japanese and American firms to
the region as they wages in their respective countries rose. Most
of these firms moved their lower end processes, which were highly
labour-intensive to Southeast Asia because of their even lower wages.
The production process was
divided into stages and countries in the region were assigned a process
that was considered appropriate to their level of wages and supporting
infrastructure. Newly industrialised countries such as South Korea
and Taiwan produced the more sophisticated electronic products, Thailand
and Malaysia produced standardised products and the Philippines, China
and India specialised in assembly and testing.
The international environment
found support in domestic economic policy. I will take the Philippines
as an example. In the Philippines, there are 518 firms in the IT industry
located mainly in Metro Manila and in various export processing zones
and industrial parks near the capital. Philippine domestic policy
for the IT industry has included the following:
- commitments
in the ITA
- deregulation
of the telecommunications industry
- incentives
for foreign investment in the Investment Priorities Plan/Omnibus
Investment Code
- the
establishment of export processing zones, including IT parks
The
FFD should find these developments favourable as they are very much
in line with the proposed recommendations. One question we can ask
is whether this experience has proven that the pursuit of such policies
can raise the much-needed resources for poverty eradication.
I
will again go back to Philippine experience to see how effective these
policies have been and we find the following.
- Export
revenues are unable to offset the imported components used by the
IT industry.
- There
have been huge tax revenue losses due to the incentives given to
FDI.
- There
are also revenue losses associated with the decline in tariffs.
Even
when taxes are expected to increase because of the growth that is
supposedly associated with increased exports, such growth can be easily
threatened by economic shocks such as an exchange rate crisis.
In
addition, the resulting export structure from all these has become
dangerous for the Philippines. Currently, the share of IT exports
to total exports reached 58 per cent in 1997 and of these exports,
80 per cent are semiconductors. More precisely, only 11 products make
up 93 per cent of total IT exports of the Philippines, making it a
“chip” republic. Despite the large share of IT products in the export
sector, the IT industry posted a positive trade balance only in one
year between 1991 and 1997.
Local
content in these products has been very low as some World Bank figures
show: 20 per cent in semiconductors; 25 per cent in simple circuit
products; and, 15 per cent in more complex products. So that while
these investors have provided some employment, the quality of employment
has been limited to low wage, low skilled work with little opportunity
for future advancement.
There
are many papers that discuss the gender aspects of export and investment
promotion through the export processing zones. These papers have looked
at the dominance of women workers in the firms located inside the
zones and I need not go into detail on this area.
Of
interest is a specific setting where tensions within households could
arise due to the changes created by an export-processing zone. We
look at this particular aspect more closely as this is less studied.
I
refer to a small industrial estate about 200 kilometres south of Manila
in a province called Batangas. The estate straddles the capital of
the province, which is Lipa, and its neighbouring town, which is
Malvar,
hence the name of the industrial estate is LIMA.
Of
interest in this gender analysis is the confluence of two characteristics
of this industrial estate. First is that LIMA stands on what were
once agricultural lands planted to rice and coconut. Second is that,
like other export processing zones, LIMA employs mainly young women
and, not necessarily women from the local community.
We
interviewed about 15 households on various aspects of their livelihoods
including income and expenditures, time use, social and economic institutions,
and resource use and control.
Many
of the households were lower middle class with multiple income earners,
including the female worker. A few households relied solely on the
female workers. The female worker’s income was usually the most regular
and stable source of income for the entire household.
We
can make the following tentative observations from the interviews:
- It
appears that traditional household roles were maintained even when
the female was working primarily because the young female worker
was still living with her parents so that her mother continued to
do the housework while the female worker put in at least 48 hours
of work.
- There
was at least an increase in the amount of money available to the
female worker for personal use items.
- Any
prestige value attached to wage work in the EPZ was surpassed by
the prestige attached to money remitted from abroad by another family
member. This means that decisions to be made by the family involved
greater consultation with the family member living in another country
than with the young female worker.
- The
young female workers earnings appeared to be used for household
maintenance but young male worker’s earnings may be used more for
personal consumption. In one case, a female worker bought a VCD,
which was used by the entire family but in another case, a male
worker in a fast-food restaurant bought a VCD but this was used
mainly by himself.
The
men were hardly in the houses as they were always out either trying
to earn some money of their own or in recreational establishments
such as cockpits and card games. Men were not amenable to the interviews
and we were unable to complete three sets of interviews because of
their hostility.
This
hostility is interesting in itself and can be interpreted as indicative
of the tensions within the household created by the industrial estate.
Most of the male household heads were farmers who have lost their
main source of livelihood with the decline in the prices of coconut
and sale of land to the industrial estate developers. This change
resulted in the loss of their breadwinner status.
Meanwhile, their daughters
have become an important if not the most important source of income
for the household. The fathers are still asserting their head-ship
by controlling the behavior of their daughters and by retaining the
major decision making functions for the household. In other words,
we find that tension has been created by a shift from agricultural
activity that is socially acknowledged as a male domain to the industrial
estate that is in a sense a female domain. The males are able to continue
asserting their head-ship because they have the authority accorded
to the older generation. Thus, in the interviews we conducted, the
female workers were unable to translate newfound material gains into
decision-making powers in their respective households.
In
summary, the prospective benefits of the policies that the FfD is
hoping to achieve through foreign direct investment and trade promotion
have not yet materialised given the recent experience of the Philippines.
In addition, a gender perspective of the policies shows that the resulting
restructuring of livelihoods can lead to an increased tensions within
households as male household heads continue to assert their position
even as the entire household now relies upon the young female worker
for survival.
Marina Durano
is Research Coordinator at the Asia Gender and Trade Network, Philippines.
She has been working as a senior lecturer in Economics at the University
of the Philippines, and is presently a Fellow of the Development Methodology
Institute. Marina Durano can be contacted at : gtasia@wow.net
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